Intrinsic value of Bill Barrett - BBG

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$3.69

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$3.69

 
Intrinsic value

$1.92

 
Up/down potential

-48%

 
Rating

sell

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BBG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -13.94
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  179
  286
  442
  662
  960
  1,355
  1,862
  2,500
  3,282
  4,224
  5,335
  6,625
  8,099
  9,762
  11,615
  13,657
  15,887
  18,300
  20,894
  23,663
  26,604
  29,714
  32,987
  36,424
  40,020
  43,777
  47,694
  51,774
  56,018
  60,432
  65,019
Variable operating expenses, $m
 
  1,256
  1,940
  2,902
  4,210
  5,940
  8,166
  10,961
  14,393
  18,520
  23,393
  29,049
  35,515
  42,807
  50,932
  59,887
  69,663
  80,246
  91,619
  103,763
  116,660
  130,294
  144,650
  159,717
  175,489
  191,962
  209,140
  227,029
  245,641
  264,994
  285,108
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  269
  1,256
  1,940
  2,902
  4,210
  5,940
  8,166
  10,961
  14,393
  18,520
  23,393
  29,049
  35,515
  42,807
  50,932
  59,887
  69,663
  80,246
  91,619
  103,763
  116,660
  130,294
  144,650
  159,717
  175,489
  191,962
  209,140
  227,029
  245,641
  264,994
  285,108
Operating income, $m
  -91
  -969
  -1,498
  -2,240
  -3,250
  -4,585
  -6,304
  -8,462
  -11,111
  -14,297
  -18,058
  -22,424
  -27,416
  -33,045
  -39,317
  -46,230
  -53,776
  -61,946
  -70,725
  -80,100
  -90,056
  -100,581
  -111,663
  -123,294
  -135,468
  -148,185
  -161,445
  -175,255
  -189,622
  -204,562
  -220,089
EBITDA, $m
  81
  -695
  -1,073
  -1,605
  -2,329
  -3,286
  -4,518
  -6,064
  -7,962
  -10,245
  -12,941
  -16,070
  -19,647
  -23,681
  -28,175
  -33,129
  -38,537
  -44,392
  -50,683
  -57,401
  -64,536
  -72,078
  -80,020
  -88,355
  -97,080
  -106,193
  -115,695
  -125,592
  -135,888
  -146,594
  -157,721
Interest expense (income), $m
  58
  55
  93
  147
  224
  329
  467
  645
  869
  1,143
  1,473
  1,862
  2,315
  2,831
  3,415
  4,064
  4,780
  5,562
  6,408
  7,317
  8,288
  9,319
  10,409
  11,556
  12,761
  14,022
  15,339
  16,712
  18,142
  19,630
  21,178
Earnings before tax, $m
  -170
  -1,024
  -1,590
  -2,387
  -3,474
  -4,914
  -6,771
  -9,107
  -11,979
  -15,440
  -19,531
  -24,286
  -29,730
  -35,876
  -42,731
  -50,294
  -58,556
  -67,507
  -77,133
  -87,417
  -98,344
  -109,899
  -122,071
  -134,850
  -148,229
  -162,207
  -176,784
  -191,967
  -207,765
  -224,192
  -241,267
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -170
  -1,024
  -1,590
  -2,387
  -3,474
  -4,914
  -6,771
  -9,107
  -11,979
  -15,440
  -19,531
  -24,286
  -29,730
  -35,876
  -42,731
  -50,294
  -58,556
  -67,507
  -77,133
  -87,417
  -98,344
  -109,899
  -122,071
  -134,850
  -148,229
  -162,207
  -176,784
  -191,967
  -207,765
  -224,192
  -241,267

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  276
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,385
  1,779
  2,748
  4,110
  5,964
  8,414
  11,567
  15,527
  20,387
  26,233
  33,135
  41,146
  50,305
  60,635
  72,143
  84,828
  98,675
  113,665
  129,774
  146,976
  165,245
  184,557
  204,891
  226,233
  248,573
  271,907
  296,238
  321,577
  347,941
  375,353
  403,844
Adjusted assets (=assets-cash), $m
  1,109
  1,779
  2,748
  4,110
  5,964
  8,414
  11,567
  15,527
  20,387
  26,233
  33,135
  41,146
  50,305
  60,635
  72,143
  84,828
  98,675
  113,665
  129,774
  146,976
  165,245
  184,557
  204,891
  226,233
  248,573
  271,907
  296,238
  321,577
  347,941
  375,353
  403,844
Revenue / Adjusted assets
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
Average production assets, $m
  1,116
  1,786
  2,759
  4,126
  5,987
  8,446
  11,612
  15,586
  20,465
  26,334
  33,262
  41,304
  50,498
  60,867
  72,420
  85,153
  99,053
  114,101
  130,272
  147,540
  165,879
  185,264
  205,677
  227,101
  249,526
  272,949
  297,374
  322,810
  349,275
  376,792
  405,393
Working capital, $m
  233
  -69
  -106
  -159
  -230
  -325
  -447
  -600
  -788
  -1,014
  -1,280
  -1,590
  -1,944
  -2,343
  -2,788
  -3,278
  -3,813
  -4,392
  -5,014
  -5,679
  -6,385
  -7,131
  -7,917
  -8,742
  -9,605
  -10,506
  -11,447
  -12,426
  -13,444
  -14,504
  -15,605
Total debt, $m
  712
  1,203
  1,914
  2,912
  4,270
  6,066
  8,378
  11,280
  14,843
  19,128
  24,187
  30,059
  36,773
  44,344
  52,780
  62,078
  72,228
  83,216
  95,024
  107,633
  121,024
  135,179
  150,084
  165,728
  182,103
  199,207
  217,042
  235,615
  254,940
  275,033
  295,917
Total liabilities, $m
  814
  1,304
  2,015
  3,013
  4,371
  6,167
  8,479
  11,381
  14,944
  19,229
  24,288
  30,160
  36,874
  44,445
  52,881
  62,179
  72,329
  83,317
  95,125
  107,734
  121,125
  135,280
  150,185
  165,829
  182,204
  199,308
  217,143
  235,716
  255,041
  275,134
  296,018
Total equity, $m
  572
  475
  734
  1,097
  1,592
  2,247
  3,088
  4,146
  5,443
  7,004
  8,847
  10,986
  13,431
  16,189
  19,262
  22,649
  26,346
  30,349
  34,650
  39,243
  44,120
  49,277
  54,706
  60,404
  66,369
  72,599
  79,096
  85,861
  92,900
  100,219
  107,826
Total liabilities and equity, $m
  1,386
  1,779
  2,749
  4,110
  5,963
  8,414
  11,567
  15,527
  20,387
  26,233
  33,135
  41,146
  50,305
  60,634
  72,143
  84,828
  98,675
  113,666
  129,775
  146,977
  165,245
  184,557
  204,891
  226,233
  248,573
  271,907
  296,239
  321,577
  347,941
  375,353
  403,844
Debt-to-equity ratio
  1.245
  2.530
  2.610
  2.650
  2.680
  2.700
  2.710
  2.720
  2.730
  2.730
  2.730
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
  2.740
Adjusted equity ratio
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -170
  -1,024
  -1,590
  -2,387
  -3,474
  -4,914
  -6,771
  -9,107
  -11,979
  -15,440
  -19,531
  -24,286
  -29,730
  -35,876
  -42,731
  -50,294
  -58,556
  -67,507
  -77,133
  -87,417
  -98,344
  -109,899
  -122,071
  -134,850
  -148,229
  -162,207
  -176,784
  -191,967
  -207,765
  -224,192
  -241,267
Depreciation, amort., depletion, $m
  172
  275
  424
  635
  921
  1,299
  1,786
  2,398
  3,149
  4,051
  5,117
  6,354
  7,769
  9,364
  11,142
  13,100
  15,239
  17,554
  20,042
  22,698
  25,520
  28,502
  31,643
  34,939
  38,389
  41,992
  45,750
  49,663
  53,735
  57,968
  62,368
Funds from operations, $m
  118
  -750
  -1,166
  -1,753
  -2,553
  -3,615
  -4,985
  -6,709
  -8,831
  -11,388
  -14,414
  -17,932
  -21,961
  -26,512
  -31,590
  -37,193
  -43,317
  -49,953
  -57,091
  -64,718
  -72,824
  -81,397
  -90,429
  -99,912
  -109,841
  -120,215
  -131,034
  -142,304
  -154,030
  -166,224
  -178,898
Change in working capital, $m
  -4
  -26
  -37
  -53
  -72
  -95
  -122
  -153
  -188
  -226
  -267
  -310
  -354
  -399
  -445
  -490
  -535
  -579
  -622
  -665
  -706
  -746
  -786
  -825
  -863
  -902
  -940
  -979
  -1,019
  -1,059
  -1,101
Cash from operations, $m
  122
  -778
  -1,129
  -1,700
  -2,482
  -3,520
  -4,863
  -6,556
  -8,643
  -11,162
  -14,147
  -17,622
  -21,607
  -26,113
  -31,145
  -36,703
  -42,782
  -49,374
  -56,468
  -64,054
  -72,118
  -80,651
  -89,643
  -99,087
  -108,978
  -119,313
  -130,094
  -141,325
  -153,012
  -165,165
  -177,798
Maintenance CAPEX, $m
  0
  -172
  -275
  -424
  -635
  -921
  -1,299
  -1,786
  -2,398
  -3,149
  -4,051
  -5,117
  -6,354
  -7,769
  -9,364
  -11,142
  -13,100
  -15,239
  -17,554
  -20,042
  -22,698
  -25,520
  -28,502
  -31,643
  -34,939
  -38,389
  -41,992
  -45,750
  -49,663
  -53,735
  -57,968
New CAPEX, $m
  -108
  -670
  -973
  -1,367
  -1,861
  -2,460
  -3,165
  -3,975
  -4,879
  -5,869
  -6,928
  -8,042
  -9,194
  -10,369
  -11,553
  -12,733
  -13,900
  -15,048
  -16,171
  -17,268
  -18,339
  -19,386
  -20,413
  -21,424
  -22,425
  -23,423
  -24,425
  -25,436
  -26,465
  -27,517
  -28,601
Cash from investing activities, $m
  -83
  -842
  -1,248
  -1,791
  -2,496
  -3,381
  -4,464
  -5,761
  -7,277
  -9,018
  -10,979
  -13,159
  -15,548
  -18,138
  -20,917
  -23,875
  -27,000
  -30,287
  -33,725
  -37,310
  -41,037
  -44,906
  -48,915
  -53,067
  -57,364
  -61,812
  -66,417
  -71,186
  -76,128
  -81,252
  -86,569
Free cash flow, $m
  39
  -1,619
  -2,376
  -3,491
  -4,977
  -6,901
  -9,328
  -12,317
  -15,920
  -20,180
  -25,126
  -30,782
  -37,156
  -44,251
  -52,062
  -60,578
  -69,783
  -79,661
  -90,193
  -101,363
  -113,155
  -125,557
  -138,558
  -152,153
  -166,342
  -181,125
  -196,511
  -212,511
  -229,139
  -246,417
  -264,366
Issuance/(repayment) of debt, $m
  0
  491
  711
  998
  1,359
  1,796
  2,311
  2,902
  3,563
  4,285
  5,059
  5,872
  6,714
  7,572
  8,436
  9,298
  10,150
  10,988
  11,808
  12,609
  13,391
  14,155
  14,905
  15,644
  16,375
  17,104
  17,835
  18,573
  19,325
  20,093
  20,884
Issuance/(repurchase) of shares, $m
  110
  1,031
  1,925
  2,857
  4,113
  5,759
  7,858
  10,472
  13,655
  17,455
  21,910
  27,048
  32,888
  39,438
  46,699
  54,667
  63,330
  72,675
  82,686
  93,347
  104,642
  116,557
  129,082
  142,208
  155,931
  170,252
  185,173
  200,703
  216,854
  233,643
  251,089
Cash from financing (excl. dividends), $m  
  108
  1,522
  2,636
  3,855
  5,472
  7,555
  10,169
  13,374
  17,218
  21,740
  26,969
  32,920
  39,602
  47,010
  55,135
  63,965
  73,480
  83,663
  94,494
  105,956
  118,033
  130,712
  143,987
  157,852
  172,306
  187,356
  203,008
  219,276
  236,179
  253,736
  271,973
Total cash flow (excl. dividends), $m
  147
  -1,128
  -1,666
  -2,493
  -3,618
  -5,105
  -7,016
  -9,415
  -12,357
  -15,894
  -20,068
  -24,909
  -30,442
  -36,680
  -43,626
  -51,280
  -59,633
  -68,673
  -78,385
  -88,754
  -99,764
  -111,401
  -123,653
  -136,510
  -149,967
  -164,021
  -178,676
  -193,937
  -209,815
  -226,324
  -243,482
Retained Cash Flow (-), $m
  -23
  -179
  -259
  -364
  -495
  -654
  -842
  -1,057
  -1,298
  -1,561
  -1,843
  -2,139
  -2,445
  -2,758
  -3,073
  -3,387
  -3,697
  -4,002
  -4,301
  -4,593
  -4,878
  -5,156
  -5,429
  -5,698
  -5,965
  -6,230
  -6,496
  -6,766
  -7,039
  -7,319
  -7,607
Prev. year cash balance distribution, $m
 
  276
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  16.7
  2.5
  0.4
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Bill Barrett Corporation, an independent energy company, acquires, explores for, and develops oil and natural gas resources in the United States. It primarily holds interests in the Denver-Julesburg basin and the Uinta oil program in the Uinta Basin in the Rocky Mountain region of the United States. The company was founded in 2002 and is headquartered in Denver, Colorado.

FINANCIAL RATIOS  of  Bill Barrett (BBG)

Valuation Ratios
P/E Ratio -1.6
Price to Sales 1.6
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 2.3
Price to Free Cash Flow 20
Growth Rates
Sales Growth Rate -13.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -66.9%
Cap. Spend. - 3 Yr. Gr. Rate -24.8%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 124.5%
Total Debt to Equity 124.5%
Interest Coverage -2
Management Effectiveness
Return On Assets -7.7%
Ret/ On Assets - 3 Yr. Avg. -9.8%
Return On Total Capital -12.9%
Ret/ On T. Cap. - 3 Yr. Avg. -14.2%
Return On Equity -30.3%
Return On Equity - 3 Yr. Avg. -30.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 77.1%
Gross Margin - 3 Yr. Avg. 73.9%
EBITDA Margin 33.5%
EBITDA Margin - 3 Yr. Avg. -29.1%
Operating Margin -50.3%
Oper. Margin - 3 Yr. Avg. -136.4%
Pre-Tax Margin -95%
Pre-Tax Margin - 3 Yr. Avg. -135.9%
Net Profit Margin -95%
Net Profit Margin - 3 Yr. Avg. -108.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 27.1%
Payout Ratio 0%

BBG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BBG stock intrinsic value calculation we used $179 million for the last fiscal year's total revenue generated by Bill Barrett. The default revenue input number comes from 2016 income statement of Bill Barrett. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BBG stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.2%, whose default value for BBG is calculated based on our internal credit rating of Bill Barrett, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Bill Barrett.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BBG stock the variable cost ratio is equal to 438.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BBG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7.7% for Bill Barrett.

Corporate tax rate of 27% is the nominal tax rate for Bill Barrett. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BBG stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BBG are equal to 623.5%.

Life of production assets of 6.5 years is the average useful life of capital assets used in Bill Barrett operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BBG is equal to -24%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $572 million for Bill Barrett - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 74.602 million for Bill Barrett is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Bill Barrett at the current share price and the inputted number of shares is $0.3 billion.


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COMPANY NEWS

▶ ETFs with exposure to Bill Barrett Corp. : May 22, 2017   [May-22-17 01:23PM  Capital Cube]
▶ Analyzing Chinas Crude Oil Imports and Demand   [May-17-17 07:40AM  Market Realist]
▶ ETFs with exposure to Bill Barrett Corp. : May 5, 2017   [May-05-17 03:52PM  Capital Cube]
▶ Bill Barrett reports 1Q loss   [May-02-17 05:58PM  Associated Press]
▶ ETFs with exposure to Bill Barrett Corp. : April 19, 2017   [Apr-19-17 02:11PM  Capital Cube]
▶ ETFs with exposure to Bill Barrett Corp. : March 30, 2017   [Mar-29-17 08:28PM  Capital Cube]
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▶ How Bill Barrett Corporation (BBG) Stacks Up Against Its Peers   [Dec-14-16 04:07AM  at Insider Monkey]
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Stock chart of BBG Financial statements of BBG Annual reports of BBG
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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